NHS contractor CSC has reported a 57% rise in profits in its delayed fourth quarter results, but took a $112.9m (£56.5m) charge for cumulative accounting errors over tax liabilities and software licence sales.

Tash Shifrin
June 13, 2007

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NHS contractor CSC has reported a 57% rise in profits in its delayed fourth quarter results, but took a $112.9m (£56.5m) charge for cumulative accounting errors over tax liabilities and software licence sales.

The IT services firm is the lead contractor for the NHS’s £12.4bn National Programme for IT (NPfIT) in three out of five regions. It is currently locked in talks with troubled software subcontractor iSoft over the delivery of its long-delayed Lorenzo care records system – a core element of NPfIT.

CSC blocked the £140m sale of iSoft to Australian software firm IBA, saying this would not support successful delivery of Lorenzo. Legal action threatened by iSoft is on hold while the two firms discuss a greater role for CSC in managing the project. CSC has also considered buying the troubled software firm, which has reported a string of losses.

In its results for the three months ending 30 March, CSC posted profits of $249.7m (£125m), sharply up from $158.8m (£79.4m) for the same quarter last year, while revenues rose 4% to $4.05bn.

Profits for the full-year were $388.8m (£194.4m), including a $262m (£181m) charge for restructuring costs.

The results were delayed after CSC found “significant” accounting errors for the financial years 2000 to 2006 relating to tax liabilities. But in announcement posted with the quarterly results, CSC admitted there were other errors, which it described as “insignificant”, including "a correction required with respect to the accounting for the sale of licences for a software product".

CSC did not give a detailed breakdown of the charge for the cumulative errors, but said. “The total effect of the errors resulted in a reduction of net income of $22.2m (£11m) and $90.7m (£45.4m) for fiscal years 2007 and 2006, respectively.”